Office 365 is a brand. But Microsoft has a challenge to overcome by using that name. Their challenge is that the Office name is so synonymous with Word, Excel, PowerPoint and so on that customers and resellers can get confused with what Office 365 actually is.
In a nutshell Office 365 is either the Office suite of client applications (Word, etc.) or online cloud services such as Exchange, SharePoint and Lync or both of those.
Below is a table containing most of the commercial Office 365 options (aka plans) you can buy along with a summary of whether that plan includes cloud services and the Office client. A high-level list of what’s included can be found on office.microsoft.com.
The best place to determine the detailed feature demarcation between those plans is via the Office 365 Service Descriptions on TechNet.
Licensing is straightforward with Office 365. Whatever Office 365 plan you have, the licence is per-user. This is a big difference from on premise Office which remains per-device. If you have Exchange, Lync or SharePoint on premise you can choose to licence access to these on a per-device or per-user basis or even to mix and match but the Office 365 cloud services are only per-user.
Why is this? One of the principles of cloud computing is anywhere access and typically the user will travel more than the device. I want to access my services at home, at work, at the airport, around my mum’s house. One in five men have participated in a conference call whilst on the toilet (according to research on Wtop.com). It makes sense to licence the user because they can access from any device. I can email from any device, IM and join a video-conference from any device (that supports Lync), get to my files and sites and business intelligence in SharePoint from any device. And if the Office 365 plan includes the Office client, then that can be locally installed on up to 5 devices concurrently and these can be a mix of Windows, Mac, corporate machine or personally-owned PCs.
One other important aspect to Office 365 licensing is the concept of a USL or User Subscription licence. Most Microsoft server software requires a Client Access Licence (CAL) to enable access to the software’s features. Windows Server, Exchange Server, Lync Server and SharePoint Server all require CALs. Office 365 is no exception but we call a CAL a USL because you only subscribe to online services, they’re not perpetual unlike CALs which you don’t need to buy again every year. The monthly, per-user cost of Office 365 includes all the USLs you need however the Enterprise Office 365 plans also include an implicit CAL whereas Midsize Business and Small Business plans do not.
Why is this important? If you have a hybrid infrastructure with some on premise Exchange, Lync or SharePoint servers then your users will need CALs to access those as well as USLs to access their Office 365 services. Having implicit access rights granted within the USL means you do not need to maintain CALS for those users who are covered by an Office 365 plan (one which includes cloud services). This is detailed in the Product Use Rights document for each of the on-premises servers, an example of which is the Exchange Server 2013 Standard requirements below showing that an Office 365 E1, E3 or E4 USL is fine for access but doesn’t list Midsize or Small Business USLs.
In summary, Office 365 is a big beast which can encompass the Office client suite, cloud services or both depending on which Office 365 plan you have. Each plan differs in individual features but is broadly licensed the same way; per-user. A bonus of subscribing to the Enterprise plans that include cloud services is they allow the licenced user access to on premise Exchange, Lync and SharePoint servers without needing a separate CAL.